Wednesday, February 19, 2014

NAFTA at 20: How ‘Free Trade’ Helps Banks Block Regulation

Penny
Pritzker, U.S. Secretary of Commerce, gestures during an interview with
Reuters in Mexico City in this February 2014 file photo. The North American Free Trade Agreement,
just turned 20, has been in the news lately. Its advocates hope to
extend its reach and depth through a Trans Pacific Partnership trade
agreement and similar deals with Europe. Trans Pacific Partnership’s possible threat to shoe-industry jobs in Maine has properly received much attention in the local press, but NAFTA has other lessons that deserve close scrutiny.

Perhaps NAFTA’s greatest achievement has been rhetorical. Agreements
like a Trans Pacific Partnership are still called “free trade.” They are
nothing of the sort. They employ coercive means at the domestic and
international levels to enshrine monopoly privilege for key segments of
the FIRE sector (Finance, Insurance, Real Estate) of U.S. capitalism.
The instability and rapaciousness of deregulated finance on an
international plane will likely cost even more jobs than NAFTA.

NAFTA was originally promoted with classic arguments of “comparative
advantage.” If tariffs on goods are eliminated, each nation can
specialize in those at which it is best. Trade between nations then
increases the total size of the pie. The classic theory, however,
postulates underlying assumptions, such as full employment, that have
virtually never applied in reality.

Even if we accepted this questionable thinking, there would be even
more compelling reasons to reject a Trans Pacific Partnership. Economist
Dean Baker has frequently pointed out
that these agreements require foreign governments to accept the terms
of U.S. patent and copyright laws, in effect extending monopoly pricing
power beyond U.S. boundaries. The Trans Pacific Partnership likely will
add insult to injury by prohibiting Maine from importing cheaper drugs from Canada. So much for a Trans Pacific Partnership as a trade-promoting agreement.